Marketing Strategy of Hugo Boss PerfumesTable of Contents

Summary.. 3

1. Introduction.. 4

2. Situation Analysis 4

2.1 SWOT Analysis. 4

2.2 PESTEL Analysis 6

2.3 Differential Advantage/ Competitive Edge.. 7

1. Recommended Strategy. 8

3.1 Segmentation, Targeting & Positioning.. 8

3.2 Marketing Objectives (SMART) 10

3.3 Marketing Strategies & Programs. 10

1. Conclusion.. 12

Bibliography. 13

SUMMARYThe report has focused on evaluating the current position of Hugo Boss through identifying its various strengths and weaknesses. It has also focused on the opportunities and threats that the company is currently facing. Hugo Boss is a financially strong company and functioning well in the market, there are certain areas that can be improved on the basis of the proposed marketing plan. One area where the company can penetrate into a different market segment is by putting forward a fragrance that is exclusively aiming at working women. Along with that another recommended course of action has been provided in the form of targeting the segment of the population with age range of 14-19 years as well. The report has also identified that different prices can be offered for fragrance for teenagers and for working women based on their degree of affordability for the target market. As far as the place is concerned the retail outlets of the company, super markets and stores can be used to make the fragrance range available to the consumers. The promotional tools ranging from billboards to social media can be used to market the product effectively to gain a larger market share. In addition to this it will also enable the company to gain a competitive position in the market.

1. 1. INTRODUCTIONMarketing plays a significant role in the success of an organization. It is not only the quality of the product that helps it in gaining a significant market share, but also the marketing tactics and tools used by the company determine the sales and growth of a product into a successful one. The report aims to analyze the marketing strategy of Hugo Boss perfumes. The company has been in the market for many years providing a wide range of fragrances for both men and women (Group Profile, 2010).

The report seeks to analyze the current situation of the company by focusing on its sources of strengths and weaknesses. Along with that it will also evaluate the opportunities and threats present in the external environment. A further understanding of the external environment of the company will be provided through PESTEL analysis. It will also address the unique features of the company and its product which has become a source of advantage for it. The report will also consider the current position of the product and its ability to compete with the rivals. The strategy utilized for the purpose of marketing of the fragrance range by Hugo Boss will also be discussed. A few recommendations will also be provided to identify the areas of growth and the related actions that can be taken to take benefit from it.

1. 2. SITUATIONAL ANALAYSISSituation analysis consists of the tools such as SWOT and PESTEL analysis that provide an overview about the market environment in which a firm is operating. Along with that it also highlights the potential sources of strength that are related to the processes within the company. Ferrell & Hartline (2011) have indicated that situational analysis is a valuable tool for the management as it provides a thorough understanding of the recent situation in the market, thus providing a path to build the marketing strategy of the company.

2.1 SWOT Analysis:2.1.1 Strength:The Hugo Boss group is involved in the production of different products ranging from fashion clothing to perfumes. Hugo Boss perfumes have the major strength in the form of brand recognition as it is a well known name in the international market. The company has its range of fragrances available in 124 geographic regions around the globe (Hugo Boss Annual Report, 2010). The company is also financially stable, with a significant portion of revenues being generated from the sale of its perfumes. Innovation is the key factor that has helped the organization in its growth at an international level. The company is also focusing on expanding its number of retail outlets around the globe.

2.1.2 Weaknesses: A major source of weakness for the Hugo Boss perfume segment is that it is comparatively more expensive than the perfumes available in the market from its rival companies. Over the years the company has become more focused on the development of its other fashion related items resulting in a low focus on fragrance segment.

2.1.3 Opportunities:One of the main opportunities for the company is the increasing demand of its products around the world facilitating its strategy of opening of retail outlets for its products. As mentioned in the annual report (2010) the company is planning to strengthen its position in the Asian market as well with specific focus on China.

2.1.4 Threats:Economic crisis has been a major source of threat for the company; however it has been able to handle the turbulence with effective strategic planning. Another threat the company faces is the competition from the rivals with each company trying to gain a larger market share. Alterations in the legal and political framework of the different countries can also be a source of threat for it.

2.2 PESTEL Analysis:2.2.1 Political:The changes in the political environment of a country have an influence on the distribution and sales of a product. Since the products of Hugo Boss are being sold in the geographic regions that havent faced any major political issues, the company had no disruptions in its distribution and supply network.

2.2.2 Economic:The economic condition of a country and the international market can result in declining sales for an organization. Hugo Boss also had to face the drop in sales, shares and profitability. However the decline has not been significant to result in huge loss for the company (Hugo Boss Annual Report, 2010).

2.2.3 Social:The changing trends in the international market with an increasing emphasis on using products which are of high quality, with a recognized brand and reflect a sense of luxury has been a source of benefit for many companies including Hugo Boss. The company is involved in the sale of perfume range which is considered to be a part of luxury items by its users (Hugo Boss Annual Report, 2010). However the changes occurring in the taste and preference of the consumers need to be considered as a product can become out dated due to the changes in these factors.

2.2.4 Technological:Changes in the technology enable companies to bring in more efficient means of production and supply of its products. The company has been able to develop and expand its product line on the basis of incorporation of innovation and technology. The use of technology has made the company improve the quality of its products over time and thus gain a strong position in the market.

2.2.5 Environmental:The increasing awareness about the threat to environment due to pollution and emission of toxic gases has propelled organizations to participate in sustainability activities. These activities focus on environment friendly business practices. Hugo Boss focuses on following the environment friendly procedures and guidelines offered by environment protection agencies in its manufacturing process.

2.2.6 Legal:In case of legal factors a company is liable to follow the taxation policies and other legal requirements highlighted by the government. Along with that the patent laws also form a part of legal framework. Hugo Boss also needs to align its processes with the legal framework provided by the countries in which it is operating. It also has to ensure that it has taken the necessary steps to acquire copyright to its various brands and products.

2.3 Differential Advantage/ Competitive Edge An organization is able to gain a competitive advantage in the market by utilizing its various product attributes to position itself as a strong brand in comparison to its rivals (Hooley, Piercy & Nicoulaud, 2009). This ability to gain a competitive edge in the market has been linked with the identification and appropriate usage of the Unique Selling Point (USP) by an organization.

Hugo Boss has been facing competition from Christian Dior, Burberry fragrance, Chanel no. 5 etc. These companies have also been trying to sell their range of perfumes to the consumers with similar needs. Thus the competition for gaining the larger market share is high in the industry.

In order to deal with its rivals the company has used the strategy of differentiation by offering high quality perfumes such as Boss Black, Boss Orange for both men and women with a premium price range (Brand Overview, 2010). Thus, appealing to the people who have a need to stand out in the crowd by using products that are high quality with a slightly higher price label than others. Hugo Boss has been able to identify its fragrance range as a luxury product which is used by people belonging to the different age groups in different parts of the world.

The factors of brand image and price structure have been successfully used by the company to have access to the consumers with financially stable positions who are willing to pay a higher price for a product of their choice. Hart (2003) has stated that differentiation strategy facilitates an organization in effectively targeting the customers and selects a competitive positioning for its products in the market. In the same manner Hugo Boss has used differentiation strategy to place its fragrances as distinct and unique to attract the consumers.

1. 3. RECOMMENDED STRATEGY3.1 Segmentation, Targeting and Positioning (STP)The components of segmenting, targeting and positioning (STP) allow an organization to develop an understanding about the population , the market it needs to target for its products and the positioning of the product in the market in such a manner that helps it in gaining a strong position (Stone & Desmond, 2007). In case of the range of fragrance offered by Hugo Boss the company can focus on these factors as recommended in the following section of the report:

3.1.1 Segmentation:

The segment of the population Hugo Boss is currently focusing on consists of men and women belonging to the age range of 20 onwards. The company has also launched a special fragrance to cater to the needs of the professional men.

In order to capture the larger market share than the current situation, it can also consider the segment of professional women who are also a part of the business world. Another segment the company can consider is the teenagers who can provide it a larger market segment.

3.1.2 Targeting:

Currently Hugo Boss is focusing on the professionals and people who can afford to purchase its perfumes as symbol of quality and high price. Therefore its fragrance is not something that can be afforded by everyone.

A recommended course of action for the company will be to include other segments in the market as well for its products. For instance it can launch a perfume addressing the target population of female professionals.

Another target market can be seen in the form of teenagers and the company can divert a little from its exclusive focus on differentiation. It can offer a lower cost perfume for teenagers which will definitely help it in gaining a larger market share. The company is currently financially stable nonetheless but promoting a perfume for the teenagers will help it in gaining access to the young generation a well.

3.1.3 Positioning:

At present Hugo Boss perfumes are associated with the image of being expensive which helps the customers in developing the idea that it is meant for people who can afford such luxury. This has been a result of the differentiation strategy adopted by the company to market and position its products for the customers.

A different approach to positioning can be taken by the company to capture a larger market share. However for this purpose the company will need to make some changes in its current marketing focus. One of the changes will occur at the level of target market.

The company can use the differentiation strategy to market its perfume for working women as they will be more likely to give a positive response to the brand image of luxury and high quality. On the other hand teenagers may not respond that well to the same premium price strategy. Therefore the company can introduce a perfume which is low cost and addressed the needs of the age group of people belonging to 14 to 19 years of age.

3.2 Marketing Objectives and Goals (SMART)One of the areas of consideration for the recommended marketing strategy is to keep the goals SMART. This will help Hugo Boss in evaluating the success of the marketing plan and its application. Achievement of the objectives indicates that the company has considered the internal and external factors while setting targets that were not only feasible but also measureable. For the marketing of its perfumes the company can focus on the following goals:

To reach a 10% increase in the market share of the fragrance range

To make Hugo Boss the favoured brand by working women in USA & UK by 2013.

To make Hugo Boss the favoured brand by working women in 120 countries of till the end of Fiscal year 2015.

To promote the use of Hugo boss fragrance in people belonging to age group of 14 to 19 years till 2014.

3.3 Marketing Strategies and Programs (4 Ps)In order to achieve the above mentioned goals Hugo boss can use the marketing mix. As stated by Jobber & Fahy (2006: 10) marketing mix for a product will include product, price, place and promotion. For Hugo boss perfumes, the following marketing mix has been recommended.

Product:This is the most important part of marketing mix as it helps a company in identifying the type of product it will be presenting to its consumers. The product will be perfume catering to the needs of professional women and teenagers. The company has been able to establish a positive image in the market over the years. However there is still an opportunity to explore the market segment of working women and teenagers. It can launch a small range of fragrance for teenagers so that the needs of this new market segment can be catered to as well.

Price:The second most important component of marketing mix is the price of the product. Hugo Boss is known for its premium price range related to its range of fragrance. However the recommended course of action for the marketing of its new products has two aspects. One aspect of the price structure is that the perfume for working women can be launched and marketed with a price structure that is similar to the other fragrances offered by the company. On the other hand the perfume range being offered to the age group of 14 to 19 years needs to have a more affordable price structure as teenagers arent able to afford perfume as a luxury item. So for this segment a low price structure can be offered.

Place: Place refers to the mode of distribution through which a product is made available to the target market. In case of the perfumes of Hugo boss, it can use its retail outlets as a basic place where the consumers can go and purchase it. The perfumes can also be made available on large stores and leading super markets that are already displaying the other range of perfumes for the company.

Promotion:This factor is the most critical one in the marketing mix as it determines the outcome of a marketing plan. Effective promotion strategy uses a variety of channels to communicate about the product to the targeted segments of the market. Hugo Boss can promote its perfumes by putting up displays in the major super markets and stores to attract the attention of the customers. It can also use billboards as a means of introducing the new range of perfume in the market. Social media has become one of the most powerful tools of marketing. The company can use social networking websites to communicate to the targeted marketed about its range of fragrance. It can be used as an effective source of promotion while dealing with the target market of people belonging to age group of 14 to 19 years.

4 CONCLUSION

Hugo Boss has been providing its consumers with unique fragrances, aiming at the target market of professionals and people who perceive its perfume as a luxury product. It has been able to provide its products to many people across the world, establishing a positive brand image in the market. The company also has the advantage of selling its fragrance for the target market that can afford a premium price product. However the same tactic of differentiation can be perceived as a limitation of the company as it is not taking advantage of the other segments of the market that can be the potential customers.

The company can focus on the segments of working women and teenagers who have diverse needs when it comes to fragrance. The company can use the different marketing mix for both of these segments to achieve its objectives over the specified time frame. It can keep on is premium price fragrance for working women, but for teenagers it can adopt a more flexible view so that this area of the market can also be used as a source of gaining competitive advantage. This strategy will in turn help the company is strengthening its position further by gaining larger market share that its current position.

BIBLIOGRAPHYBrand Overview (2010). The HUGO BOSS Group. Retrieved on November 24, 2011 from http://group.hugoboss.com/en/brand_profiles.htm

Ferrell, O. C & Hartline, M. D. (2011). Marketing Strategy. South-Western CENGAGE Learning. USA.

Group Profile (2010). The HUGO BOSS Group. Retrieved on November 24, 2011 from http://group.hugoboss.com/en/corporate_profile.htm

Hart, S. (2003). Marketing changes. Thomson Learning. UK.

Hooley, G., Piercy, N. F & Nicoulaud, B. (2009). Marketing Strategy and Competitive Positioning. Pearson Education Limited. UK.

Hugo Boss Annual Report (2010). The HUGO BOSS Group. Retrieved on November 24, 2011 from http://group.hugoboss.com/en/corporate_profile.htm

Jobber, D & Fahy, J. (2006). Foundations of Marketing. McGraw-Hill Education Limited. UK.

Stone, M. A & Desmond, J. (2007). Fundamentals of Markets: A Critical Evaluation. Routledge. USA.